The Sales Formula
Although you may not usually be conscious of it, I will describe the "formulas related to business" that you realize when they are expressed as mathematical equations.
1. The Sales Formula
You may often rack your brains to increase sales, but the sales formula is as follows.
Sales = Average Transaction Value x Number of Customers x Purchase Frequency
This formula is extremely important, and to increase sales, you must execute one of the following:
1. Provide products or services to improve the average transaction value
2. Attract customers to bring in more customers
3. Have customers purchase as repeaters
If you do not execute any of these, sales will not increase.
With this formula in mind, it is necessary to think about how much you want to increase sales.
For example, if every item increases by 10%:
1.1 x (Average Transaction Value) x 1.1 x (Number of Customers) x 1.1 x (Purchase Frequency) = 1.331 (Sales)
This results in a 33% increase in sales. Reality is harsh, but it shows that working hard for 10% can produce significant results.
2. Response content for each item
I will describe the response content for average transaction value, number of customers, and purchase frequency.
Increasing average transaction value
1. Review product unit prices
Instead of simply raising the unit price, prepare package deals or tiered product options (pine, bamboo, and plum).
2. Propose higher-end products (upselling)
This is a method of recommending higher-priced products, such as showing a higher-grade car when a customer is buying a car.
3. Propose related products (cross-selling)
This is a method of selling other products, such as selling fries with a hamburger.
Increasing the number of customers
To increase the number of customers, you need to be conscious of the following formula.
Total Number of Customers = Number of New Customers + Number of Existing Customers x Repeat Rate
The total number of customers increases by cultivating new customers or increasing the rate at which existing customers repeat their purchases.
However, there is a "1:5 rule" which states that the cost of selling to new customers is five times the cost of selling to existing customers.
Increasing purchase frequency
1. Planned obsolescence
This is to make the items the customer owns "old" functionally or psychologically, and to promote replacement.
2. Increase usage opportunities
Increase usage opportunities by changing the time of purchase or expanding the places of purchase.
First, what you should work on is "increasing the average transaction value" . Increasing the number of customers or increasing purchase frequency is inefficient because it requires acquiring new customers , so to reliably increase sales, it is important to maintain existing customers and "increase the average transaction value" to boost sales .
3. Sales heal everything
Sales are not everything, but "sales" is an easy-to-understand and important indicator to show the growth of a company or yourself.
"Sales heal all" is a common saying. In a company, most of the difficult and painful things will naturally disappear, or be healed, as sales begin to grow.
Sales = Average Transaction Value x Number of Customers x Purchase Frequency
Keep the sales formula in mind, increase your sales, and let's grow our organization and our people!!